20-1564

20-1564. Investments

A. A domestic title insurer shall invest and maintain invested funds to the amount
of minimum paid-in capital required under this title only in cash and the securities
described in subsection B, paragraph 1 of this section and sections 20-537, 20-538 and
20-551.

B. A domestic title insurer may invest its capital, surplus and accumulations in
excess of the amount of minimum paid-in capital required under this title in the
investments made eligible for funds of domestic insurers by sections 20-537 through
20-541, sections 20-543 through 20-548 and sections 20-551, 20-554 and 20-555 and in
addition in the following investments:

1. Real estate loans. Ground rents and bonds, notes or other evidences of
indebtedness, secured by first mortgages or trust deeds on unencumbered and improved real
property located in any state, district or territory of the United States, and in
investments in the equity of the seller under contracts covering the entire balance due
on bona fide sales of the real property, provided, however, that a loan guaranteed or
insured in full by the administrator of veterans' affairs pursuant to the federal
servicemen's readjustment act of 1944, as amended, may be subject to a prior encumbrance.
Real property shall not be considered to be encumbered within the meaning of this
subsection by reason of the existence of instruments reserving mineral, oil, water or
timber rights, rights-of-way, sewer rights, rights in walls or driveways, by reason of
liens inferior to the lien securing the loan of the insurer, or liens for taxes or
assessments not yet delinquent, or by reason of building restrictions or other
restrictive covenants or by reason of any lease under which rents or profits are reserved
to the owner, if, in any event, the security for the loan is a first lien on the real
property, and if there is no condition or right of re-entry or forfeiture under which the
lien can be cut off, subordinated or otherwise disturbed. Real property shall be deemed
to be improved if such real property is a lot or portion of a subdivision or development
that has been improved by off-site improvements for the general benefit of all or a
portion of the subdivision or development. No mortgage or trust deed, loan or investment
in a seller's equity under a contract made or acquired by the insurer on any one property
shall at the date of investment exceed seventy-five per cent of the value of the real
property securing the loan, or subject to the contract, provided, however, that the
limitation in respect to value shall not apply to a loan which is:

(a) Insured by, or for which a commitment to insure has been made by, the federal
housing administrator or commissioner pursuant to the federal national housing act, as
amended;

(b) Guaranteed by the administrator of veterans' affairs pursuant to the federal
servicemen's readjustment act of 1944, as amended, except that if only a portion of a
loan is so guaranteed, the limitation shall apply to the portion that is not guaranteed;

(c) Insured by the administrator of veterans' affairs pursuant to the federal
servicemen's readjustment act of 1944, as amended.

2. Federal housing administrators debentures. Debentures issued by the federal
housing administrator or commissioner in settlement of claims pursuant to the federal
national housing act, as amended.

3. National mortgage association securities. Securities of national mortgage
associations or similar national mortgage credit institutions organized under the federal
national housing act, as amended.

4. Federal land bank and related securities. Bonds, debentures and other
obligations of federal land banks or federal intermediate credit banks issued pursuant to
the federal farm loan act, as amended, or of banks for cooperatives issued pursuant to
the farm credit act of 1933, as amended.

5. Loans on leaseholds. Loans on leasehold estates on improved, unencumbered real
estate located in any state, district or territory of the United States, provided that no
loan shall exceed seventy-five per cent of the value of the leasehold at the date of
investment, and provided further that every loan shall provide for amortization by
repayments of principal at least once in each year in amounts sufficient to repay the
loan within a period of four-fifths of the unexpired term of the leasehold, but within a
period of not more than thirty-five years.

6. Federal savings and loan insurance corporation obligations. Bonds, notes or
obligations issued, assumed or guaranteed by the federal savings and loan insurance
corporation, under the federal national housing act, as amended.

7. Federal home loan bank obligations. Bonds, notes or obligations issued, assumed
or guaranteed by the federal home loan bank, or issued, assumed or guaranteed by the
federal home loan bank board under the federal home loan bank act, as amended.

C. Section 20-536, subsections B and C do not apply to domestic title insurers.

D. Any title insurer that is organized under the laws of this state may purchase,
receive, hold and convey real estate or an interest in real estate:

1. Required for its convenient accommodation in the transaction of its business
with reasonable regard to future needs.

2. Acquired in connection with a claim under a policy of title insurance.

3. Acquired in satisfaction or on account of loans, mortgages, liens, judgments or
decrees, previously owing to it in the course of its business.

4. Acquired in part payment of the consideration of the sale of real property owned
by it if the transaction shall result in a net reduction in the company's investment in
real estate.

5. Reasonably necessary for the purpose of maintaining or enhancing the sale value
of real property previously acquired or held by it under paragraph 1, 2, 3 or 4 of this
subsection.

E. A title insurer shall not continue to hold any real estate acquired by it under
paragraph 2, 3 or 4 of subsection D for more than five years from the date of
acquisition, unless it shall obtain the written approval of the director to hold the real
estate for a longer period of time.

F. A title insurer may invest in a title insurance plant, and that plant shall be
considered an asset at the actual cost of the plant. The aggregate admitted value of the
investment shall not exceed the amount allowed pursuant to the accounting practices and
procedures manual adopted by the national association of insurance commissioners. In
determining the admitted value of a title insurance plant, no value shall be attributed
to furniture and fixtures, and the real estate in which the title plant is housed shall
be carried as real estate. The value of title abstracts, title briefs, copies of
conveyances or other documents, indices and other records comprising the title insurance
plant shall be determined by considering the expenses incurred in obtaining them. Once
the title insurance plant is operational its value may be increased only by the
acquisition of another title insurance plant by purchase, consolidation or merger. In no
event shall the value of the title insurance plant be increased by additions made as part
of the normal course of abstracting and insuring titles to real estate. Subject to the
limitations prescribed in this subsection, a title insurer may enter into agreements with
one or more other title insurers authorized to do business in this state, or with one or
more title insurance agents, to participate in the ownership, management and control of a
title insurance plant to service the needs of all parties, or in lieu of that common
ownership the parties may invest in the stock of a corporation owning and operating a
title plant for the same purposes. Subject to the limitations with respect to value set
forth in this subsection, any joint investment in existence on the effective date of this
section may be continued indefinitely.

G. Funds equal to the unearned premium reserve of a title insurer may be held in
cash or invested, but the funds shall be invested only in those classes of investments
authorized by sections 20-537 through 20-541, sections 20-543, 20-544 and 20-545 and
subsection B, paragraphs 4, 6 and 7 of this section, except that not more than one-fourth
of the reserve may be invested in preferred or guaranteed stocks or shares.

H. Nothing in this section applies to any investments made by a title insurer when
acting as a trustee.